As a tax on property, rates have existed in some form since 1601. The framework currently in place was largely established by the Local Government Finance Act 1988 (LGFA 1988), as amended. LGFA 1988 established that:

1. •

   rates were to be raised only on non-domestic property—occupiers of domestic property would instead pay community charges (from 1993 replaced by council tax, see Practice Note: Council tax)

2. •

   rates bills were to be set nationally by way of government specified multipliers to be applied to rateable values for each financial year

3. •

   local authorities would administer and collect rates income, but pay the proceeds over to a government pool (net of an allowance for costs of collection)

4. •

   pooled rates income would be redistributed to authorities as a grant based on an assessment of need

5. •

   a number of reliefs were available in specific instances, some mandatory and some at the discretion of the local authority

6. •

   LGFA 1988 therefore established rates as a national tax known as national non-domestic rates (NNDR), administered locally. NNDR